Google delivers forecast-beating financial results
Google, the internet giant, provided further signs of economic recovery today as it delivered a forecast-beating set of quarterly results and signalled plans to resume its policy of taking on staff.
Beating earlier Wall Street predictions, the California-based company reported revenues of $5.94bn for the last three months, an increase of 7% on the same period twelve months ago. Profits for the quarter rose by 27% to $1.64bn, from the $1.29bn reported this time last year. Eric Schmidt, Google's chief executive, said he thought the company's growth was a sign that a wider economic recovery was underway.
"While there is a lot of uncertainty about the pace of economic recovery, we believe the worst of the recession is behind us and now feel confident about investing heavily in our future," he said.
The results maintain the trend seen in the previous quarter, when Google bucked the market by posting increased year-on-year profits.
Much of the surprise growth has been the result of massive savings achieved by the company during the recession, largely through scaling back some of its less important programmes and curbing a notoriously free-spending culture.
The 12-year-old company, which now has around 20,000 employees, curtailed its aggressive hiring policy, closed down some fringe projects and shut some offices deemed superfluous to requirements.
It even cut back on its famous cafeterias, staffed by professional chefs and offering employees a wide choice of meals at any time of the day, after it was discovered that around a third of all the food cooked was not eaten.
Schmidt said Google would step up its hiring again and push forward with projects in internet search, mobile phones and other areas.
"We now have the confidence to be optimistic in our future and we're going to invest as a result of that," he said.
Despite the positive results for the group as a whole, the news was not quite as rosy for Google's British operation. Executives have struggled to cope with currency fluctuations over the past year, as well as what Google chief financial officer Patrick Pichette said was a result of "ongoing macro-economic weakness".
The company, which dominates the internet advertising market in the UK, brought in $765m (£470m) of British business for the three months ending on September 30 - down 1.5% on last year's figure of $776m (£477m).
Despite the stagnant UK market, however, many observers see Google's overall rude health as positive news not only for the technology industry, but for the wider economy.
The company's heavy reliance on advertising, which accounts for almost all of its revenue, suggests that the deepest period of recession for the advertising industry could be over. That, in turn, will be seen as a positive sign for other advertising-reliant businesses as well as those firms which spend heavily on ad campaigns to help promote their products.
"Advertisers want to stay in front of people who are spending," said JMP Securities analyst Sameet Sinha. "They are willing to pay up for it." Wall Street reacted positively to Google's news, with shares in the company up around 2% to $540 in after-hours trading.
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